Multiple digital solutions are hindering, rather than helping, Kiwi SMEs
Small and medium-sized businesses in New Zealand collectively invest half a billion dollars ($501 million) each year in digital solutions to help improve business operations, but half of these companies find that some of these tools hinder them in fact, according to a new study. of the business management platform, MYOB.
In a survey of over 500 New Zealand SMEs, half (50%) say they currently experience poor digitalization, in which some of their business management software applications and tools operate in silos, rather than integrate seamlessly with each other.
Research also reveals that this disconnect from systems costs organizations time, money and resources, and poses strategic risk.
“Over the past few years we have seen a strong push by New Zealand SMEs towards digitalization and earlier this year our technology snapshot showed that more than half of Aotearoa’s SMEs are now making half or more of their activities using digital tools,” says Daniel West, Director of Sales and Support at MYOB.
“Now what we’re seeing is that compared to the digital subscription or streaming services that we consumers use and enjoy every day, businesses aren’t getting the same integration and connectivity between the digital applications they’re investing in and, therefore, it’s costing them money,” he says.
Financial impact of digital disconnection
More than a third (34%) of local SMEs surveyed have seen their costs skyrocket due to disconnected digital tools, and across New Zealand SMEs an estimated $334 million is wasted on digital tools every year unused.
The report found that one in two companies surveyed (50%) admit that they have given up using certain digital business solutions due to their inefficiency, but continue to pay for them. When asked why they were still paying for them, the main reasons were that it was too complicated to change and because there were no better alternatives to switch to.
“It’s a subscription overload for businesses,” West says.
“Many consumers are canceling subscriptions amid mounting cost-of-living pressures, and now is a great time for businesses to assess their subscription overhead as well, especially if some remain unused,” he says.
“Our research shows that New Zealand SMEs rely on more tools and apps to run their business than their Tasman counterparts, but now is the time to move from simply digitizing to selecting tools that deliver multiple services in one place, or only paying for the features they really need.
“The resulting potential savings could help alleviate some of the financial pressures they feel.”
About 1 in 10 companies surveyed (13%) believe that getting rid of software applications they rarely use could save them between $100 and $200 per month, and a similar proportion (9%) believe it could save money. monthly from $300 to $400.
As New Zealand’s productivity growth continues to lag behind other OECD countries, MYOB research has found that New Zealand SMEs are currently losing the equivalent of one working day per week (7 hours) on average on performing tasks caused by a lack of integration between their tools.
More than 9 in 10 companies (98%) say they waste valuable time on manual tasks or have to duplicate tasks, such as entering information from one system to another (48%) or checking consistency between platforms (45% ), while more than a third found themselves correcting errors or modifying data after the transfer of information between systems (37%).
A growing strategic risk
Disconnection issues also pose a strategic risk. The MYOB survey found that more than 4 in 5 New Zealand businesses (88%) struggle to get a complete picture of business performance based on information from their various systems or find themselves making decisions operations without complete visibility of their business. Nearly half (46%) also say this lack of visibility makes it difficult to add capabilities to their team and departments, or adapt the business to challenges that ultimately stifle growth and compromise opportunities for success.
“At MYOB, we know that there are six core business processes around managing jobs, employees, suppliers, cash, finance and revenue generation, which when digitized can make a huge difference to an SME’s chances of survival and success,” says West.
“But what emerges from our research is that local SMBs are really struggling to find systems that really integrate with each other, or a solution that offers all the features they need in one place” , he said.
“As an industry, software companies like ours need to ease this heavy burden of business digitization and work to create better-connected systems,” West says.
“Nothing should hold back ambitious businesses, and we recognize that we need to do something about it. That’s why we’re especially passionate about building a cohesive business management platform and investing in strategic partnerships and acquisitions that will help us deliver this to SMEs. Their productivity and growth depend on it.”
Malcolm Luey, director of MBIE’s Digital Boost initiative, agrees that solving the disconnection challenge requires action from both SMBs and enterprises developing the digital solutions they need.
“Often we see that SMEs are looking for digital tools that meet a very specific need, but as they go through this process of finding the solution that best suits them, one question they need to ask themselves is whether these options are interoperable with their other existing digital platforms and tools,” he says.
“On the other hand, however, the ICT sector as a whole has a responsibility to create the right digital environment for SMEs to thrive, and that includes thinking and acting around the development of interoperable solutions with other and greater openness to working together in the marketplace.”